Pages

Wednesday, 2 July 2014

U.S. Urges Myanmar Nationals to Work Harder to Get Off Sanctions List

The U.S. is urging Myanmar nationals hit with economic sanctions to work harder to remove themselves from the blacklist, a move that could enable American businesses to access a wider network of contacts in the quickly opening country.

The list--administered by the U.S. Treasury department--freezes the assets of around 200 individuals, companies and other entities in Myanmar who are considered cronies of the previous military regime. The sanctions also prevent U.S. investors from having business dealings with them, blocking Americans from formally engaging with some of the most powerful business leaders in the country.

Speaking in Yangon late Saturday after a weeklong visit to the country, Tom Malinowski, assistant secretary of state for democracy, human rights and labor, said Myanmar companies and individuals on the sanctions list "have to demonstrate to [the U.S.] that they are engaging in responsible business practices." He urged them to follow legal processes laid out by the Treasury Department to bring themselves in from the cold and enable U.S. firms to compete on a more even footing with other international investors now eyeing the formerly reclusive military state after a series of democratic reforms.During his visit to Myanmar, Mr. Malinowski invited individuals and major entities on the list to meetings. They included prominent figures such as Tay Za, one of the country's richest men, and Steven Law, head of local conglomerate Asia World. Mr. Law is the son of the late Lo Hsing Han, who founded Asia World and was put on the blacklist for alleged drug trafficking, though he was never prosecuted. The Myanmar military's business arm, Union of Myanmar Economic Holdings, was also invited.

Many accepted the offer of discussions, Mr. Malinowski said. In a briefing, he said the talks centered on explaining what sanctioned people and firms need to do to get off the blacklist. "We are optimistic that this process is going to produce some interesting results," Mr. Malinowski said, adding that helping people find a way off the sanctions "could produce a business environment that leapfrogs ahead of [Myanmar's] neighbors."

This list of specially designated nationals has been criticized privately by multiple U.S. businesses looking to do business in Myanmar. They are subject to a stringent set of reporting requirements when investing over $500,000 there and have complained that the list, which includes some of the country's wealthiest businessmen continues to hold back investment there. Even though the bulk of U.S. sanctions against Myanmar started being lifted more than two years ago, the U.S. is only the 13th-largest source of foreign direct investment in Myanmar with $243 million in approved investments at the end of May this year. China remains Myanmar's top investor, with $14 billion in investments, or 30% of all foreign investment in the country.

Mr. Malinowski's visit marked the first time such comprehensive meetings on the topic have been held. The assistant secretary of state--who served as the Washington director for Human Rights Watch from 2001 to 2014--was accompanied by John Smith, associate director of the Treasury Department's Office of Foreign Assets Control, which produces the list of specially designated nationals.

The trip also included a meeting with Min Aung Hlaing, commander-in-chief of Myanmar's military, in which Mr. Malinowski was accompanied by Lt. Gen. Anthony Crutchfield, deputy commander of the U.S. Pacific Command. Lt. Gen. Crutchfield, one of the highest-ranking U.S. military officers to visit the country, addressed young soldiers at the Myanmar National Defense College in Naypyitaw--a first in the U.S.'s cautious re-engagement with Myanmar's armed forces as it rethinks its role in the nominally civilian-run country.

Indeed, Mr. Malinowski acknowledged that despite the dramatic changes in Myanmar since it began its transition to civilian rule in 2011, the "hardest, deepest reform questions" remain unanswered. He singled out the handling of national elections due next year, the military's future role in the nation and deep-seated religious tensions as sources of particular concern.

Mr. Malinowski pointed to the situation in Rakhine state, which has been embroiled in sectarian conflict since riots broke out in mid-2012. More than 200 people have been killed since, with 140, 000 others--overwhelmingly Muslim-- still living in squalid camps. Branding these tensions as the "unscrupulous manipulation of racial and religious tensions for political ends," he flagged this as one of the greatest risks to further reform in the country.

The U.S., however, is "willing to be very patient" with Myanmar, Mr. Malinowski said, and is "engaged and committed for the long haul."